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Okay, is it also true that I can "borrow against" my 401k to purchase a home?

401k loans are permitted, but your particular plan may not offer them. Your local HR department can tell you if you can get a 401k loan.

A 401k loan is a loan from your 401k (i.e. the money comes out of your current investments)...the 401k funds can not be used as collateral for a loan, the money has to come out of your balance.

You repay a 401k loan with after-tax money (which is then taxed again at retirement). Normally, this isn't a big deal, but the interest on a mortgage is a deduction, so taking a 401k loan instead of a mortgage might cost you tax dollars.

If you leave your employer (or are laid off, etc), the loan typically becomes due right away; you either have to come up with the cash or you end up paying taxes and penalties.

There are low-down and no-down mortgage options these days; if you have a good credit rating and stable income, you can probably buy a house without tapping your 401k.

Good Luck
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